Mumbai, Apr 30: The Reserve Bank of India (RBI) is planning to set up a committee to look into the issue of facilitating the development of fixed rate loan products in the banking system, RBI Deputy Governor, Anand Sinha said.
“We will set up a committee soon to facilitate the development of fixed rate loan products in the market, which are presently absent in the system,” Sinha told reporters on the sidelines of an Assocham event here.
Explaining the rationale behind the move, he said it is the question of market development as consumer should get a range of products to make a choice.
In its last credit policy review in April, the central bank had announced to set up a committee to look into the issue.
Referring to the issue of hedging, Sinha said the central bank has asked banks to have a board mandated hedging policy to protect corporate clients from currency fluctuations.
“We know that the corporates take a view on the exchange rate movement based on the currency movement and then decide whether to hedge or not to hedge. Point is that if we are looking for a safer system then we will have to gear up on our hedging in a better way...,” Sinha said.
He also said the central bank doesn't have any fixed level for rupee and will only intervene to check excess volatility.
“RBI doesn't look for a fixed level of rupee. We will only intervene if there is excess volatility,” he said adding that it is closely watching the liquidity situation.
Presently, banks are borrowing around Rs 1 lakh crore from the liquid adjustment facility (LAF) route, which is above RBI's comfort level of around Rs 60,000 crore.
“We will set up a committee soon to facilitate the development of fixed rate loan products in the market, which are presently absent in the system,” Sinha told reporters on the sidelines of an Assocham event here.
Explaining the rationale behind the move, he said it is the question of market development as consumer should get a range of products to make a choice.
In its last credit policy review in April, the central bank had announced to set up a committee to look into the issue.
Referring to the issue of hedging, Sinha said the central bank has asked banks to have a board mandated hedging policy to protect corporate clients from currency fluctuations.
“We know that the corporates take a view on the exchange rate movement based on the currency movement and then decide whether to hedge or not to hedge. Point is that if we are looking for a safer system then we will have to gear up on our hedging in a better way...,” Sinha said.
He also said the central bank doesn't have any fixed level for rupee and will only intervene to check excess volatility.
“RBI doesn't look for a fixed level of rupee. We will only intervene if there is excess volatility,” he said adding that it is closely watching the liquidity situation.
Presently, banks are borrowing around Rs 1 lakh crore from the liquid adjustment facility (LAF) route, which is above RBI's comfort level of around Rs 60,000 crore.
